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LEONARD EXPRESS, INC. v. UNITED STATES

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


April 15, 1969

Leonard Express, Inc., Plaintiff,
v.
United States of America and Interstate Commerce Commission, Defendants

The opinion of the court was delivered by: ALDISERT

ALDISERT, C.J.

We are to determine whether the deliberate movement of freight by a common carrier from one state to another and then a return to the state of origin for delivery for the sole purpose of creating a technical interstate passage is a legitimate and appropriate exercise of interstate authorities granted by the Interstate Commerce Commission. *fn1" The ICC held it was not; the carrier, Leonard Express, Inc., has appealed. *fn2"

Leonard Express has been issued no rights by the Pennsylvania Public Utility Commission (PUC) for operations between the Pittsburgh and Philadelphia areas. It claims authority to make shipments between these two Pennsylvania cities on the strength of tacking interstate rights granted by the ICC from Western Pennsylvania to New Jersey. *fn3"

  To perform this feat, Leonard's trucks travel the Pennsylvania Turnpike from Western Pennsylvania into New Jersey where they then reverse direction, backtracking over much of the same highway, and enter Philadelphia. This route requires 454 miles of driving; the most direct route using highways solely within Pennsylvania is 134 miles less. *fn4"

 The Pennsylvania PUC urged the ICC to issue a cease and desist order to Leonard because it did not have appropriate intrastate rights from Pittsburgh to Philadelphia as required by the Pennsylvania Act of May 28, 1937, P.L. 1053, Art. K II. §§ 201, 202(a), 66 P.S. §§ 1121, 1122(a). *fn5" The PUC conceded, however, that if Leonard's use of its interstate rights was legitimate and proper, then Pennsylvania certification was not required.

 Leonard maintained that its deliveries to Philadelphia were a legitimate interstate operation. Predicating its argument on the proposition that the tacking of interstate rights for a purely intrastate operation is proper so long as the operation is open, notorious and devoid of what it calls "bad faith," Leonard insisted that because no attempt was made to hide its operation and because it required its drivers to meticulously follow every mile of the interstate passage from Pennsylvania to New Jersey and back into Pennsylvania, there could be no "subterfuge." The carrier urged that absent subterfuge, the use was legitimate.

 Preliminarily, we find it necessary to emphasize that this issue will not be resolved by a semantic excursion into the meaning of the word "subterfuge." Certain cases have used this rather nebulous term in discussing similar issues. The present advocates, as have others, appear to ascribe delphic meaning to this particular word. *fn6" We understand the word "subterfuge." to be a simple, shorthand expression of what is meant by the inappropriate use of interstate rights to obviate the necessity of obtaining state certificates and operating under the legitimate authority of state regulating agencies. *fn7" In this respect, we cannot accept appellant's contention that the propriety of the use of tacked-on-rights is dependent on the degree of secrecy and stealth involved. Plainly, if this is an illegitimate exercise of interstate rights, then the publication and notoriety attending its exercise is of little moment. Bearing in mind that no particular significance attaches if the law is violated openly, we turn to a review of the ICC's decision.

 In a suit to enjoin enforcement of an ICC order, this three-judge court is governed by the scope-of-review provisions of the Administrative Procedure Act, 5 U.S.C.A. § 706. *fn8" Minneapolis & St. Louis Railway v. United States, 361 U.S. 173, 192, 4 L. Ed. 2d 223, 80 S. Ct. 229 (1959). There have been various judicial expressions of the precise scope of this review. *fn9" We are impressed by the standard set forth in Illinois Central R. Co. v. United States, 263 F. Supp. 421, 430 (D.C. Ill. 1966), aff'd. 385 U.S. 457, 17 L. Ed. 2d 509, 87 S. Ct. 612:

 

"The function of this court in reviewing this determination of the Commission is sharply restricted. 'It is limited to ascertaining whether there is warrant in the law and the facts for what the Commission has done.' United States v. Pierce Auto Freight Lines, Inc., 327 U.S. 515, 536. 90 L. Ed. 821, 66 S. Ct. 687, 698 (1946). 'The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body.' Mississippi Valley Barge Line Co. v. United States, 292 U.S. 282, 287, 78 L. Ed. 1260, 54 S. Ct. 692, 694 (1934). Once this court finds substantial evidence in support of the Commission's findings, it cannot go further and inquire into the soundness of the Commission's reasoning or the wisdom of the result. Virginian Ry. v. United States, 272 U.S. 658, 663, 71 L. Ed. 463, 47 S. Ct. 222 (1926); United States v. New River Co., 265 U.S. 533, 542, 68 L. Ed. 1165, 44 S. Ct. 610 (1924). "

 It is within this scope of review that we are confronted with the ICC's two basic conclusions: (1) the shipment of the freight in question was essentially intrastate in character; and (2) the use of interstate rights to justify such shipments impinged upon the state's sovereignty over intrastate commerce.

 We find that there was overwhelming evidence to support the Commission's finding that the Leonard freight was essentially intrastate in character. The evidence clearly demonstrated that virtually all of the 84 truckloads shipped from January to June, 1967, originated in the Western Pennsylvania plant of Continental Can Company and were delivered to Can Pak in Philadelphia. Although Leonard sought to demonstrate some commingling with interstate cargo, the ICC had ample reason to conclude that the shipments were essentially intrastate.

 The evidence presented to the Commission sharply differed from that in Jones Motor Co. v. United States, 218 F. Supp. 133 (E.D. Pa. 1963); aff'd, Highway Express Lines, Inc. v. Jones Motor Co., 377 U.S. 217, 12 L. Ed. 2d 292, 84 S. Ct. 1224, where less than 22 intrastate shipments were consolidated and commingled with 108 interstate deliveries. Similarly, the Commission could properly distinguish Leonard's operation from that which was encountered in Service, Storage and Transfer Co. v. United States, supra, note 6, where the reason for leaving the state of origin was to perform necessary operations at the company terminal. *fn10"

 Having determined that the operation was essentially intrastate, the Commission was faced with circumstances almost identical with those portrayed in Hudson Trans. Co. v. United States, 219 F. Supp. 43 (D.N.J. 1963), aff'd sub. nom. Arrow Carrier Corp. v. United States, 375 U.S. 452, 11 L. Ed. 2d 477, 84 S. Ct. 524 (1964). Speaking for the court, Judge McLaughlin determined that where there was no incidental intrastate shipment commingled with substantial interstate cargo and no necessity to leave the state of origin, the perfunctory crossing of state lines amounted to "a deliberate, calculated method employed by those carriers to avoid the unfavorable consequence to them of their intrastate Pennsylvania traffic coming within the rightful jurisdiction of the Utility Commission of that Commonwealth." 219 F. Supp. at 49.

 There is nothing in the present appeal which would remove it from the persuasive reasoning of Hudson. The authority of the Interstate Commerce Commission is predicated on the recognized federal power over interstate commerce. Where there is no such commerce, there can be no legitimate use of federal rights granted for this purpose. The Commission was warranted in concluding that to permit such operations would illegally impinge upon the Commonwealth of Pennsylvania's exclusive jurisdiction over intrastate shipments.

 The complaint will be dismissed.


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